Project financing can be traced back to the medieval times1 when in the 12th century the British Crown negotiated with Frescobaldi (an Italian merchant bank of that time) a loan for the development of the Devon silver mines on the basis of a production payment loan structure.2 In the 19th century, many infrastructure projects were financed using project financing techniques, such as railways in Argentina (1860) and India (1880) and the Suez Canal (1850). However, project financing as a sophisticated modern financing technique started to be actively used in early 1970s, as a result of the international banking crisis of 1974 that caused a dramatic change in the international financial markets and in the ways of financing infrastructure and other types of projects.3 In fact, the modern version of limited-recourse project financing was first pioneered in the early 1970s for developing the North Sea oil fields. Since then, project financing has been increasingly used as a tool for financing large, capital-intensive projects.


Project Financing Project Finance Debt Financing Suez Canal Project Risk 
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© Kluwer Academic/Plenum Publishers 1999

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